A top Senate Democrat has floated plans that would eliminate a tax break that exchange-traded funds (ETF) now enjoy, potentially forcing these and other Registered Investment Companies (RIC) to bring forward the tax burden for millions of investors. Sen. Ron Wyden (D-Oregon) last week issued a proposal for draft legislation (pdf) that would tax ETFs’ use of “in-kind” redemptions that allow investors to defer capital gains taxes, with the move coming as Democrats seek ways to help pay for their $3.5 trillion budget package. Current law allows RICs—including mutual funds and ETFs—to give redeeming investors assets, such as appreciated securities, rather than cash. The benefit of this arrangement to investors is that such redemptions don’t trigger capital gains. “The investment and related redemptions permit the fund to eliminate unrealized gain on the distributed assets completely tax free, allowing the mutual fund’s shareholders to defer economic gains until they liquidate their investments …https://www.theepochtimes.com/c-us-politics


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